IT'S STILL THE SEASON … for peace on Earth and good will towards all… and for making lists. So, here is a list of rules that I wish all meeting professionals would follow:
I can't tell you how many times people have agreed to dumb provisions because they failed to read the contract. Read everything that you sign before you sign it. Shame on you if you don't.
If you don't understand something, say so. The contract should be written in plain English so that anyone can understand it. Dense and ambiguous contract language often is blamed on the lawyers — and, indeed, they are often at fault — but there is plenty of blame to go around, including some for those non-lawyers who pretend they are lawyers and draft convoluted and incomprehensible clauses.
Lawyers have complicated and, indeed, screwed up countless transactions. But even more deals have gone sour because the contracting parties failed to consult their lawyers. Get a good, knowledgeable lawyer. Train your lawyer so he or she understands your business — and seek his or her advice. At the end of the day, two old clichés are true: “It is easier for a lawyer to keep you out of trouble than to get you out of trouble.” And, “You can pay me now or pay me later.”
After all that has been said and written about cancellation, termination, and attrition, many meeting professionals still don't get it. I'm often asked whether it is a good idea to have a cancellation provision in a hotel contract. Of course it is! Without such a provision, it may not be pos-sible to cancel the agreement at all. Instead, cancellation would be considered a breach of the contract. The real issue is not whether to have such a provision, but what it should say: who can cancel, for what reasons, when, and with what, if any, payment. It's also important to understand termination and attrition, and how all three interrelate in a contract.
It feels like I'm hearing fingernails on a blackboard when I see contracts with liquidated damages provisions that refer to things like “lost revenues.” I don't really know what that means, but I fear the worst. In calculating damages, it could mean all revenues a hotel perceives as lost as a result of a cancellation (or attrition). That could include the lost revenue from sleeping rooms, taxes, food and beverage, gift shop sales, charges for ancillary services (telephone, business center, in-room movies, etc.), tips, parking … You get the idea. Do not agree to a calculation of damages that you do not understand or control. And do not agree to a calculation of damages that does more than make the other side whole (compensate for actual damages). The idea behind liquidation damages is to prevent one side from being hurt. It's neither necessary nor appropriate to agree to enrich the other side.
I am a firm believer in written agreements. If it is worth asking for, it is worth getting in writing. Long, detailed contracts that spell out the nitty-gritty points of an agreement don't bother me one bit. But, there still is an important place in business for telling others exactly what you are going to do and then living up to your promises. It is important to establish trust and to be trustworthy.
Jed R. Mandel is a partner in the Chicago-based law firm of Neal, Gerber & Eisenberg, where he heads the trade and professional association practice.